Triangle entrepreneur Jud Bowman launches third startup

Serial entrepreneur Jud Bowman, whose last technology company was acquired in a deal valued at about $100 million, has formed a new advertising technology startup.

His new company, Sift Media, is a spinout from Digital Turbine, the publicly traded Los Angeles-based company that last year acquired Bowman’s previous company, Durham apps purveyor Appia. Digital Turbine disclosed in a filing with the Securities and Exchange Commission on Monday that it received $1 million in cash and a 9.9 percent ownership stake in Sift in conjunction with the spinout.

“I couldn’t be more happy to start the new year on a new note,” Bowman said in an interview.

Sift, which is based in Durham, also has raised $3.25 million in funding led by Wakefield Group, the Charlotte venture capital firm that also funded Bowman’s two prior startups. Also participating in the funding: IDEA Fund Partners of Durham, Greensboro’s Piedmont Capital and Alerion Ventures of Charleston, S.C.

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“It’s really, really hard not to bet on Jud Bowman,” said IDEA Fund’s Lister Delgado. “We invest in people, to be honest ... and Jud Bowman has proven to be successful in everything that he has done.

Bowman, 34, Sift’s president and CEO, said that the company already has left the starting blocks. “Today is the first day of business,” he said.

Sift, which is using technology originally developed by Appia that lay fallow at Digital Turbine, is in the business of bidding, on behalf of advertisers, for mobile ad opportunities offered by real-time auction exchanges run by the likes of Google and Facebook. It also has entered into an agreement with Digital Turbine that give it access to that company’s advertisers.

“Sift is going to get access to all the advertising campaigns that Digital Turbine now has,” Bowman said. Digital Turbine will receive a 20 percent cut of the revenue as part of the deal.

Bowman, whose new company is starting out in the American Underground@Main in downtown Durham, has been joined by three co-founders who worked with him at Appia: Slawek Pruchnik, vice president of technology; Jasper Rasmussen, chief (software) architect; and Aaron Schwager, lead software engineer.

Sift’s success is dependent on its technology, which will have to determine in less than 100 milliseconds whether to bid on a mobile ad opportunity and, if so, how much.

“We’re only as good as our technology and our software and our math,” Bowman said.

Today, said Bowman, the vast majority of mobile ads are brokered “by people and simple technology. Think of it as an ad sales guy somewhere selling space to McDonald’s that has been shown on Yahoo or ESPN on your phone.”

But real-time mobile ad auctions, he said, have proven to be more efficient, prompting the launch of about 20 auction exchanges.

“Our belief with Sift is that the number of ads on these exchanges is going to go from a small percentage to the vast majority,” Bowman said. Even today, he added, 1 trillion mobile ads a month are placed through auction exchanges.

Bowman knows the ins and outs of spinouts. Appia started out as a spinout from Motricity, which was the product of the merger of Power By Hand of Nashville, Tenn., and Pinpoint Networks, which Bowman co-founded as a teenager.

“Hopefully, the third time’s the charm,” Bowman said. “I wouldn’t go into a business if I didn’t think it had the potential to be very, very large – if not bigger than my first two.” He noted that Motricity peaked at more than $100 million in annual revenue and more than 500 employees and Appia generated more than $30 million in the 12 months before it was acquired.

Digital Turbine’s filing disclosed that Bowman’s annual salary will be $200,000, plus up to $100,000 in discretionary bonus based on performance, and that he provided $60,000 of his own money for Sift’s initial funding.

Bowman, who remains on Digital Turbine’s board of directors and is one of the company’s largest shareholders, said he finds it “frustrating” that Digital Turbine’s revenue growth isn’t reflected in its stock price. Appia shareholders received a 33 percent ownership stake in Digital Turbine when the company was acquired.

Digital Turbine’s revenue in its fiscal second quarter that ended Sept. 30 totaled $20.7 million, up from $11 million a year ago and 11 percent higher than the immediately preceding quarter. The company projects that its revenue in the current fiscal year will be more than triple that of a year ago.

Still, Digital Turbine shares, which were trading at $3.44 when it announced its deal to acquire Appia, were trading Monday morning at $1.26, down 7 cents.

“I couldn’t be more pleased (with the company’s performance) except for the fact that the share price hasn’t seemed to be correlated with all that progress,” Bowman said. “My hope is, in the long run, there will be that correlation.”